Showing posts with label economy. Show all posts
Showing posts with label economy. Show all posts

Sunday, July 7, 2013

The Future Economic Rebalancing Of The World



In 2017, no European country will be included in the top ten contributors to global economic growth. The emerging economies will account for fifty percent of global production of goods and services. According to IMF, in the year 2018 the proportion will increase to 55%. And this is only the continuation of a trend that began there more than thirty years and represents a consolidation in the global economic consequences. As noted by the chief economist of Goldman Sachs who invented the concept and acronym BRIC's in the 1980s when the growth of the Chinese economy was even more important today, a growth rate of China's economy 10% was less important to the world that U.S. growth by 1%. In 2013, the rates of equivalence are 8% and 4%. Today, financial markets are equally concerned of China slowdown as the U.S. recovery. No wonder that, as growth in emerging was much stronger than the rest of the world, and that their standard of living per capita has steadily catching up with the seven most industrialized countries. By the mid-1990s, countries such as Germany and Italy had dropped from the list of top ten countries with the highest growth rates. While in the 1980s, the United States accounted for 30% of global growth and Europe 20%; in 2017 no European country will included in the top ten contributors to global growth. Europe as a whole no longer and will contribute only 6% of it, while India and China will contribute to almost 50%. Even more surprising is the speed at which occurs rebalancing and this because of the masses in. The economic transformation and urbanization of China occur at a scale with the population is one hundred times greater than that of Great Britain at its early industrialization and a speed ten times. Thus the Chinese momentum is 1000 times that of Britain 200 years ago. This rebalancing is a return to the state of the world that existed in the early nineteenth century. But this is only small consolation because it is perceived as a stall and undoubtedly contributes to the gloom in US, as in the rest of Europe.

Wednesday, June 19, 2013

The Corporate Bankruptcies and The Crisis


The real crisis, the corporate bankruptcies are the real crisis and it is the creative destruction. Like it or not, the real victims of the crisis in Europe are definitely businesses. The loss of business in the Euro zone increase indeed 21% in 2013, to return to a growth rate moderate 7% in 2014. These bankruptcies are concerned and unfortunately synonymous with soaring unemployment and a real deindustrialization. Since the record figures of 2009, the waves of loss, of the United States to China, passing throughout the Europe, concentrated in areas with erratic tax incentives, such as construction and services. Once the boost is flown, numbers of companies were no longer profitable. Today, the shock wave is more fundamental: the sharp slowdown in consumer spending in Europe, or at half the exports for Asia. In Europe, the areas of distribution, furniture, consumer electronics, and automotive, and are strongly affected. This industrial Darwinism seems to be the swell of the year 2013, still marked by the credit crunch. But the induced effects are numerous: for example in Asia, companies see their market melt like snow in the sun and the overcapacity problem. This economic turbulence with a number of businesses created which also increases in many countries could it is a synonym for renewal? Economic entropy can be conducive to a new beginning, if we are to believe the evolutionary hypothesis of Schumpeter. The undertakings least well adapted and especially the least innovative way to let those who are reinventing themselves and meet new needs. "The perennial gale" Schumpeter, after the storm of 2009 and the economic winter it starts to make a lot. And yet ... The needs are there, in sectors with high added value, intensive skills, human capital and social capital, driven by research and innovation and entrepreneurship. So, of course the news is bad with soaring business failures and accelerated payment risk, while margins are already weakened. But, is it better to jump back? The answer is “Maybe”. It is also necessary that the guidelines are taken on supporting innovation, the business environment, or incentives to take care of seedlings, otherwise incubators will also be decimated.

Thursday, May 9, 2013

Europe needs long-term financing!





The urgency for Europe to reconnect with smart, sustainable and inclusive growth, which allows Europe to create jobs and, based on the areas in which it has a competitive advantage, gain market competitiveness world. To achieve this, it must meet investment needs large-scale and long-term. To finance these investments in the long term, governments and businesses, regardless of size, should have access to a long-term, predictable funding. The ability of the economy to make available such long-term funding also depends on the financial sector's ability to effectively provide users and relevant investment, effectively and efficiently, saving governments, businesses and households. This provision may be indirect, such as through banks, insurers and pension funds, either directly, via the capital markets. The long-term funding must be secured in such a way that supports structural reforms and help get the economy back on a path of sustainable growth. The financial crisis has reduced the capacity of the European financial sector to channel savings into investment long-term needs. It is important to ask whether in Europe, traditionally high dependence with regard to banking intermediation to finance long-term investments could be replaced by a more diversified system leaving more room for direct funding by capital markets and the involvement of institutional investors and alternative financial markets.

The task of ensuring the existence of an effective and efficient intermediation for long-term financing is complex and multidimensional. Recently, the Commission adopted a Green Paper on the financing of the European economy that includes public consultation. Its purpose is to launch a wide debate on how to increase the supply of long-term funding and diversify the financial intermediation system for long-term investment in Europe. The answers to the questions will enable the Commission to deepen the analysis of barriers to long-term financing to determine what policy measures could help to overcome them. The whole process could lead to different results and, in some areas it may be necessary to introduce new rules or modify existing ones, while in others, the role of the EU would to foster better coordination and promotion of best practices, or to provide specific measures to certain Member States in the framework of the European community.

Friday, April 26, 2013

The Real Estate Bubble Bursts Netherlands!



The Netherlands saw their housing bubble burst. For years the country's banks have granted mortgages without sufficient guarantees coupled with tax breaks from the government. The German newspaper Der Spiegel highlights the weaknesses of the Dutch economy, rising unemployment, reduced consumption and GDP that was stalled. Der Spiegel believes that these are the consequences of the bursting of the housing bubble in Netherlands. In addition, institutions financed more than 100% of the value of the property and tax breaks could go up to 52% of mortgage interest paid. The chart below are the property price increase:

Sunday, April 7, 2013

The Battle for the control of Silver!




Most of the countries more particularly US and China wants to control over the precious metals market. U.S want to keep the price of white metal as low as possible where as China tries to keep it in uptrend. Now days obviously gold is money but silver was the universal monetary standard for more than 7000 years. The countries have stopped minting silver coins in 1960s because of the deficit between the mining and the industrial demand. The deficit on the market has been filled for many years by selling their old reserves held by countries themselves. Those reserves were completely destroyed by the industries even though the mining production in the recent years had increased tremendously and it failed to meet the demands. To control over silver the banking oligarchy launched ETF. Investors wishing to invest in physical silver without having to carry pounds of metal ingots bought shares traded, they could easily sell. These ETFs are a huge success. In theory, the issuing banks hold hundreds of millions of ounces in stock, but only in theory. As for gold, cash investors have been diverted. Instead of buying silver bullion, and thus weigh on the rise in metal prices, banks guardians of these treasures, HSBC and JP Morgan, have manipulated the prices down. They sold the paper money, the silver-virtual, on the Comex and the London market, to lower the price of this rare and precious metal. These banksters sold five years of production in the form of derivatives in a very short term; they are absolutely unable to deliver.

When China began to open up to the outside world after the meeting Mao and Nixon, the bankers of the world have invested in China, creating new ports, equipped with the most modern refineries which enabled China to carve the lion's share in refining. The industrialization of China has enabled him to become the workshop of the world, so much so that the Middle Kingdom is poised to become the first world power. Since 1971, China sold to Westerners finished products against the dollar, the international currency. But since Nixon's visit, the currency has continued to devalue. Expressed in gold, today's dollar is worth 45 times less than that of 1971, the Chinese have been paid in funny money. China still exported 4800 tons of silver in 2006 will become a net importer in the following year to import 3500 tons in 2010.


 In March 2009, before the G20 meeting, the governor of China's central bank, the COPD, published an essay on the wishes of China's international monetary system, denouncing the failure of the current system and regretting that the new banking system proposed already by Bretton Woods has not been explored since. This rejection of the U.S. monetary hegemony will quickly turn into currency war between BRIC and Washington. In August 2009, China announced that it authorizes to default on Western derivatives, it is considered fraudulent. The silver is at the heart of the problem. In September 2009, the Chinese governments allowed its citizens to stock precious metals and launched a communication campaign pushing the silver the price is extremely low compared to gold. China then banned the export of silver which will cause a few months later the explosion at the rise in silver, putting JP Morgan in trouble. China, which had announced that it wanted to have a say about the price of raw materials, has achieved one of its objectives.


 For the record, in January 2011, Xia Bin, then a member of the Monetary Committee of the Chinese Central Bank, in an interview quoted by Bloomberg, said: "China should increase its gold and silver reserves." It seems important to reconcile this statement with the wishes of China's monetary system, especially as it was the last power to abandon the standard money in terms of silver. The U.S. policy of Roosevelt on money in 1934 caused a monetary crash in China, leading to a dictatorship then the first communism.

Monday, April 1, 2013

Ecology, carbon Emission and Economy


Sustainable development: Sustainable development takes into account all aspects related to the business (i.e.) raw materials, human and economic system. Sustainable development can produce products and services that meet the desires and human needs while preserving the environment for future generations. We can then say that sustainable development is linked with ethics. The World Commission on Environment and Development United Nations defines sustainable development in 1987 this way: "Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs." The ecological footprint is a tool to evaluate the quantity of energy used for the production of a product or service. Can then be compared with this tool the difference between what natures provides us and what we consume.

It is used to make predictions but also to measure human actions on the environment. It measures not only for human consumption but also of a country, or even the planet nature necessary for the production of an object. E. Williams REES one of the two creators of the term suggests the following definition: "The ecological footprint is the corresponding area of productive land and aquatic ecosystems required to produce the resources consumed and to assimilate the wastes produced by a defined population at a specified material life. ' The carbon balance: The carbon footprint is a tool to quantify the greenhouse gas effect greenhouse (GHG) emissions of a company or an administration. These emissions can be direct or indirect. Carbon footprint to become much more important than the ecological footprint as international governments based GHG limits on companies that are based on the calculation methods.

 The great strength of the carbon footprint that is compatible with the ISO 14064 and 14065 with the theme here is the official definition proposed by ADEME: "A method of accounting for emissions of greenhouse gases from readily available data to arrive at a proper assessment of direct or indirect emissions from your business or territory." These definitions related to the various international meetings and scientific reports have led to the emergence of these themes in world governments. The Kyoto Protocol in 1997 was the first meeting has taken quantified commitments. It aims to reduce emissions of greenhouse gases (GHGs).

Saturday, February 16, 2013

The European debt crisis going to end soon!!!



Europe emerging from a period to improve its financial situation that began in August last year, when the President of the European Central Bank (ECB), Mario Draghi announced that it would needed to support countries that are deficient in the Euro zone. This intention is then translated by a specific program for Italy and Spain, to limit the level of interest rates on their debt.

 However the optimism is reversed because of the accumulation of issues such as political scandal in Spain, financial conditions of Ireland. Hence the international markets react accordingly. Indebtedness of most European countries in relation to Gross Domestic Product is rising despite the efforts of Member States. With an average debt of the Euro zone (8000 billion Euros) over 90%, the smallest increase in interest rates impact the refinancing. The Euro zone should refinance more than 1,000 billion Euros in 2013.

 Reforms of the costs and revenues of government continue to impose. Economic lethargy does not seem to decrease. The European GDP growth is almost nil. Hence it is still in recession phase. Without growth, tax revenues are also lethargic and financial costs of states continue to be excessive. In this context, most European economies saw their unemployment rates are increasing. The question that remains is whether this or will improve? Basically, this is the strength of the U.S. economic recovery we can expect an early growth at the end of 2013. And the creation of 157,000 jobs in January 2013 is really good news. But the weakness of Europe is the situation of its banks. Without going into a pessimism that has no purpose, it should not diminish the vigilance that the Euro zone needs to restructure.

Wednesday, January 9, 2013

Growth of Asian Market


Since from the middle of 2011, Asia was the front and foremost region in the world that have many number of millionaires (3.37 million millionaires, representing 30.4% of the number of millionaires in the world) with a growth of more than 20% in four or five years. They have a total wealth of 10 700 billion that is 25.5% of the overall wealth of millionaires in the world.

 In a market asset management generally quite gloomy figure of Asia is essential for growth for the major international private banks. In the longer term, the Asian continent is undoubtedly the one that produces the most wealth and hence the most millionaires. According to industry professionals, the rapid growth of wealth is expected to continue at a rate of more than 12 to 15% over the next 5 years. To successfully lead the conquest of this Eldorado gold, banks need to understand the specificity of this market.

 They must also define a profitable business model focused on customer segmentation adapted. Finally, they must analyze their strengths and weaknesses in the region to determine how to implement cost. On the one hand the onshore market, with millionaires Asian (Chinese, Indians) who made their fortune because of the considerable economic development in the region in recent past. This market is doubly exciting because at the growing number of millionaires adds their current low supported by private banks (only 20% of Asian millionaires are entrusted to private banks). To conquer the market is considerable. On the other hand the offshore market, with a clientele composed of customers in Europe, America and the Middle East who wish to outsource all or part of their holdings to access attractive Asian markets or to enjoy banking regulations and tax more conciliatory in this part of the world. For this reason Singapore is poised to dethrone Switzerland in her role as a global financial center offshore.

Thursday, April 12, 2012

Management of collateral received: an effective lever to reduce operational and financial risks


Since the financial crisis, banks are facing a major phenomenon: the rise of non-payment of their customers. These faults are both on home loans granted to individuals and businesses as the credits distributed through credit cards for individuals.

In this context, the management process guarantees received has become a key process, acting at the heart of risk management for banks.

Monday, November 7, 2011

MEPs adjust taxation of real estate gains

MEPs adopted the amendment proposed by Gilles Carrez (UMP, Val de Marne), as amended, by the government, which is developing the new tax regime for real estate gains. He recovers, according to the general reporter the owners selling a principal residence and tenants selling their principal residence for the first time a property.

The amendment exempts from taxation of capital gains to the first transfer of a dwelling that is not a principal residence where the vendor is tenant's principal residence, as was the case before the 2004 reform. It aims in particular, according to Mr. Carr, to avoid the criminalization of young households, the Paris region or in dense urban areas, can not afford their homes because of the explosion in property prices.

Officials face unequal "one of two"

Staffing, the state officials are far from being housed in the same boat. A Defence and the Ministry of Agriculture, the rate of non-replacement of retiring workers should reach 79% and 73% in 2012. It would be only 31% for culture and bordered by an average 55%, the highest rate ever considered since 2008.

This is reflected in the general report of Gilles Carrez (UMP, Val de Marne) on the draft budget law for 2012. "The effort required to national education should be further emphasized: with 14,000 FTE (full time equivalent) less in 2012, after 16 000 FTE under the initial budget act for 2011, this ministry reaches The objective of non-replacement of an officer retiring on two "set by President Nicolas Sarkozy, to observe the general rapporteur.

Thursday, September 22, 2011

New measures to support the American economy


The U.S. Federal Reserve, Central Bank of the United States (EDF) announced Wednesday that it would take further measures to support the U.S. economy, saying the resumption of the latter remained "slow". Among the measures: the sale by the end of June 2012 the equivalent of $ 400 billion in Treasury bills.


Subsequently, the Fed plans to buy an equivalent amount with a longer maturity in an attempt to lower interest rates and long-term power purchase real estate securities without increasing the size of its portfolio, the objective to support the mortgage market. The Fed also said it would keep its key interest rate near zero until mid-2013 if necessary.

On Tuesday, investors had taken for granted that the U.S. Federal Reserve (Fed) announced shortly measures to resume, background likely to increase demand for raw materials. While opening the meeting of the Monetary Policy Committee of the Fed, investors are already betting on a new "Operation Twist", which is to lower interest rates in the long term to boost the activity without act on interest rates in the short term.

In fact, such an operation is to extend the maturity of securities held in the balance sheet, ten years and over, to reduce rates, evidence to boost business investment and household on the housing market. Such a measure Devit also have an immediate impact on prices by devaluing the dollar and increasing demand in emerging markets.

Saturday, July 23, 2011

Great Recession - 1930



The Great Depression of the 1930s is probably the most studied topic in American economic history. Contrary to some persistent myths conveyed by the opponents of the market economy, there is not yet consensus on its causes and its exceptional duration. So today begins our collaborator in the first two columns, to present another vision of the crisis as it was developed by Friedrich Hayek, Murray Rothbard, Milton Friedman, Robert Higgs and other liberal authors.

The Depression of the 1930s is invariably presented as the logical outcome of capitalism. Victim of its own contradictions that led to a crisis of overproduction and concentration of wealth in the hands of some exploiters, the market economy would have been saved by judicious intervention of the New Deal of Franklin Delano Roosevelt. This scenario, however, one big problem: it is supported by no historical data. We will therefore examine in this column a different view of the Great Depression, arguing that its severity can be explained largely by the policies of the U.S. Federal Reserve Board and the subsequent actions of Republican President Herbert Hoover, a man who is usually presents as an uncompromising liberal.

Sunday, July 17, 2011

Still bad news for U.S. economy

The U.S. economy suffered further bad news. First, the Commerce Department left unchanged its estimate for growth in the fourth quarter, to 0.6% only. However, analysts expected a 0.8% enhancement.

These figures are 2.2% growth over the whole year, from 2.9% in 2006, which is the lowest rate since 2002. Household consumption fell sharply in the last quarter (+1.9% instead of 2% estimated earlier, and after 2.8% in the third quarter) and investment in the stone has indeed fallen by 25, 2% (instead of -23.9%), the largest decline recorded since 1981. Business investment grew by only 6.9% (instead of 7.5%).

Inflation is well above normal

The index measuring prices related to consumption expenditures (PCE) increased 4.1% (instead of 3.9%), and the PCE core index (excluding food and energy) increased 2.7 %, as in the first estimate. Now the Fed wants to keep it normally from 1% to 2%.
Finally, the weekly claims for unemployment benefits rose 19,000 to 373,000 in the United States during the week ended Feb. 23. Analysts had forecast 350,000 jobless.

Thursday, June 23, 2011

The Private Equity, a market with strong growth driver - part IV


This dynamic cache, however, concerns related to the evolution of the activity. One of the first consequences of market development of private equity buyout is the generalization of so-called secondary, tertiary and even quaternary view, consisting of leveraged acquisitions of companies already owned by one or more other funds. In 2006, the third type of LBO acquisitions was made through these resale between funds. This type of assembly raises serious concerns particularly related to the high level of debt in these successive operations, which raised fears of a bubble bursting. Indeed, the succession of holding recovery strengthens the total weight of debt in financing the acquisition. But a classic LBO average 70% funded by debt. We can now understand the anxieties expressed about the level of debt when several successive LBOs are made on the same entity.

On the other hand, in a context of rising interest rates, the sector should experience difficulties, but still far from an economic downturn. Indeed, this market should continue to grow in the coming years, particularly in France where many companies are to sell, LBO funds have gained credibility recognized, will no doubt key players in the market.

The number of mega deals (ie acquisitions exceeding the one billion Euros) is more important, the private equity funds have no choice but to raise more funds. This requires, of course, on the one hand by increasing the resources collected from traditional capital providers. But also, for the sake of being less dependent on suppliers of capital and at the same time less sensitive to changes (particularly increased) interest rates on financial markets, the alternative "fund raising" on the stock market seems obvious. The money, usually so discrete and whose activity is based on the original financing of non hand, may now be found in the coast!

The Private Equity, a market with strong growth driver - part III


Then, the low cost of debt, due to low interest rates, gives montages leveraged a significant advantage over other types of acquisition financing transactions. They are based mainly on debt financing of target companies, the current environment when they are particularly favorable to more easily identify a margin between the cost of debt and the return on assets under management. However, this cannot alone suffice to explain the strong growth in activity. Private equity has above all recognition in the governance model in place in companies come under LBO financing. These companies are generally better managed and better valued, and even if some failures can be reported (ten more than 200 annual operations in France), we must recognize that the default rate of the sector is quite low and few are examples of clashes in the area of corporate governance.

Governance is indeed one of the key parameters of a company came under LBO financing. To repay debt must quickly generate cash flow. However, it is recognized that improving the economic value of a target company depends, in large part by the optimization model that will be applied. Therefore, LBO funds agree, from acquisition, to establish a mode of corporate governance more efficient and take the form of a greater focus, accountability of management (generally a shareholder as a result of the operation) and optimization of financial assets.

Saturday, June 18, 2011

Country Risk Part.III



During the introduction of the Cooke ratio, depending on whether the country was a member of the OECD or not, the commitments to residents of foreign countries were weighted at 0% or 100%. A debt security issued by a government could therefore not return in the calculation of the Cooke ratio, which consequently gave an advantage to OECD countries until 1994 and the opening of the more "modest”.

As part of the Basel II regulations, the IRB approach (Internal Rating Based) implies the existence of a probability of default for counterparties. But is it really possible to speak of "default" for the country? The S & P introduced the notion moreover SD (Default Selected) to report that states do not honor their debts, since technically they cannot be made bankrupt and businesses. Of default of a country therefore requires analysis of the creditworthiness of the state. It is thus necessary to understand properly the impact of the fiscal capacity of the State concerned on its ability to repay and to define an acceptable level of debt for sovereign debt. However, these problems are more related to the concept of sovereign risk than that of country risk as a whole; demonstrate once again that the concepts are very similar.

Investing in emerging high growth is an important trend as evidenced by the proliferation of funds BRIC (Brazil, Russia, India and China). However, although the results are quite encouraging, these investments are not safe because these countries are not immune to political tensions, as their market is very volatile at times and finally as a big part of the investment is located in the energy. That's why the rating agencies are requested by the fund managers to reassure investors, the country risk analysis and must rest.

Country Risk Part.II



Country risk is actually a combination of a multitude of risks influenced by three types of factors:

* Economic and financial factors (banking systems failing, unstable tax system, poor management of public finances ...)
* The political (legitimacy of governments, political repression, censorship, ...)
* (Socio-cultural attitudes and traditions, unequal access to resources ...)

The diagram below provides a framework for country risk analysis, the aim being to understand that country risk can be approached through a large and varied risk factors (both domestic and international).


What are the measurement tools available to risk such a company wishing to conduct an operation of setting up abroad? Two main tools are characteristic of the analytical framework for country risk:


The rating is the most used tool in the evaluation of country risk faced by business entities that have concluded a contract on an international scale. The ratings are mechanical projection of reality on a scale of one-dimensional notation. Rating procedures use criteria (economic, financial, political, social ...) very objective to make the mechanics 'scientific'.

These are essentially specialized agencies that are responsible for developing the ratings. These institutions are in most of the rating agencies (Fitch Ratings, Political Risk Services, Moody's and Standard & Poor's), but also specialized firms (Business Environment Risk Intelligence and Economic Intelligence Unit) and financial newspapers (Institutional Investor). In Europe, such as credit insurers Coface (French Insurance Company for Foreign Trade) have a role in that country risk analysis. Indeed, COFACE is often the preferred partner of SME exporters who lack the internal resources of country risk analysis.

Anticipation instruments par excellence, the risk scenarios is another essential procedure in the analysis of country risk. They aim to make combinations of multiple risk factors (economic, political ...) in "stressful" varying characteristics and for different time horizons (short, medium and long term). Scenario results then allow investors or bankers to have a more comprehensive range of their potential gains and losses, which will influence their choice whether to launch the operation.

Country Risk Part.I



The Mexican debt crisis in 1982 which forced the country to introduce a moratorium is one of the first and most contemporary manifestations of country risk. The concept also takes full extent over the 90 years with the crisis countries. Emerging from 1997 Asian crisis, Russian crisis in 1998 etc. Indeed, given the globalization of the economy and the succession of crises due to the expansion of capital movements in the world, economic agents and financial choices for their particular investment and acquisitions, need accurate information on the assessment of risk profiles of the countries covered.

A single definition of country risk is difficult to provide to the extent that it is a composite concept. Country risk encompasses all actual future events that may affect a financial investor in the conduct of its operations in relation to a country called "at risk". The risks mentioned are related to the state of the country, regardless of the quality of the debtor or the project.

However, if the concept is difficult to define exhaustively, his analysis is far from insurmountable. Many tools and procedures are available for players to understand this risk.

First, the concept of country risk and sovereign risk are often confused. Sovereign risk is the risk for financial institutions to see the sovereign (central government, ministries, local governments and regional ...) which they have granted loans, unwilling or unable to meet its payment obligations to them. Country risk in turn has a much broader scope because there is no concept of "sovereign", the entity in question is the entire country. The two concepts are nevertheless closely related. Indeed, as part of a scoring, note the Sovereign cannot be too far from the rating of the country, the quality of the first depends on the country's environment and the decisions of the Supreme rarely without consequence on the functioning economy.

Thursday, June 16, 2011

China raising up ...


China is emerging as both leading markets and rising economic power, and meeting with impressive rates of double-digit growth for several years. China's financial sector also benefits from good economic policy. countries, also following the path of openness and market liberalization in accordance with agreements signed by China to the WTO in January 2001 emerging well.

Historically, between the restructuring of agriculture, industry and the banking sector, the government, in the early 1980 gives priority to primary and secondary sectors to the detriment of the banking sector which will bear the cost of the transition economy. This position has resulted in delaying the development of banks in China and weighed on the accounts of the major institutions with bad debt rates sometimes exceeding 40%. Faced with the need for modernization of the Chinese banking, the government changed tack and have signed the WTO agreement to liberalize the banking market in 2001.
Since then, many international banks, anxious to find alternatives to growing their domestic market less dynamic, investing heavily in emerging countries and primarily in the "Middle Kingdom" which presents serious advantages …

Since January 2007, the news is full of examples of foreign investment through equity, joint ventures or acquisitions in the Chinese banks. We made especially Citigroup, which won the "Guangdong Development Bank" in front of the SG, Bank Of China 10% owned by RBS or the Construction Bank of China 9.1% owned by Bank Of America. Overall, although the role of foreign banks is negligible - they represent less than 2% of Chinese assets - their position continues to grow.

Chinese and foreigners have much to gain from the recent opening of the market (2001). Indeed, the Chinese banking sector needs foreign players to upgrade the profession and make a transfer of skills; foreign players in turn reap the benefits of Chinese growth.

However, prudential Chinese are real barriers to entry for foreign banks: capitalization of at least 1bn Yuan, exposure to a single client must not exceed 10% stake in the subsidiary and the ratio of loans / deposits do not exceed 75%.

But the stakes are: market access abysmal savings of Chinese households is worth the investment for many banks and foreign insurers. Candidates rush to the office of the CBRC (China Banking Regulatory Commission) and the Chinese newspapers that tell of six banks, want to establish subsidiaries of Chinese law. Several big names such as HSBC, Citigroup, Deutsche Bank or JP Morgan have also applied. It's a safe bet that the list will grow as and regulatory developments and market opening...